Europe economic powerhouse is back – MoneyWeek

Europeis“givingagoodimpressionofbeingbackasaglobaleconomicpowerhouse”,saysRalphAtkinsintheFT。

Theeurozonegrewatanannualpaceof3。

1%inthefirstquarter,threetimesfasterthantheUS;thebuoyantglobaleconomyhasunderpinnedexportsandbusinessinvestmentisgrowingatitsfastestpaceinadecade。

Sentimentisstrongacrosstheboard,whileinGermany,whichaccountsforaboutathirdoftheeuroarea,consumersappeartobeopeningtheirwallets,withApril’sretailsalesgrowthatafour-monthhigh。

ThissuggeststhatconsumptionisrecoveringfromJanuary’sVAThike。

TheOECDhasjustincreaseditsGermangrowthforecastfor2007from1。

8%to2。

8%。

Eurozoneunemploymenthasfallento7。

1%,thelowestsincerecordsbeganin1993。

That’snottoofaroffwhatwouldhavebeenarespectableUSlevelafewyearsago,accordingtoKevinDalyofGoldmanSachs。

Itshowsthattherehasbeen“animportantstructuralimprovement”。

Supply-sidereforms,suchaschangestobenefitssystemsandworkpracticesinGermany,arepushingpeopleintotheworkforce,saysLexintheFT。

Companieshavealsorestructured,improvingtheircompetitiveness。

Thankstocostcutsandagreementswithunions,Germanunitlabourcostshavefallenoverthepastsixyears。

WithearningsstillsurprisingontheupsidewhiletheyhavebeenslowinginAmerica,andvaluationsstillreasonable–thepan-EuropeanDJStoxx600isona2007p/eofabout14–thereisscopeforfurthergains。